Nio Stock Falls As Tesla Rival Joins Fundraising Spree Among Electric-Car Stocks

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Nio (NIO) will join Xpeng Motors (XPEV) and Li Auto (LI) in the race for cash as Chinese electric-car stocks try to fend off Tesla (TSLA) in the world’s biggest car market. Nio stock tumbled.


China’s Nio announced late Thursday it plans to sell up to 60 million fresh American Depositary Shares (ADS). Underwriters including Morgan Stanley have the option to buy an additional 9 million shares.

Nio’s move comes after Xpeng raised about $2.16 billion after disclosing plans Monday to sell 40 million new shares. And Li Auto raised $1.36 billion from a recent offering of 47 million new shares.

The fundraising follows rising worldwide demand, pushing electric-car companies to sell more stock to fund growth and expansion. Nio will use the proceeds in part to develop autonomous driving technologies, it said Thursday.

And as Tesla expands manufacturing capacity in Shanghai to begin producing the Model Y crossover, it is raising roughly $5 billion in its third stock offering of the year. Tesla’s locally made Model 3 sedan was the second-best-selling electric car in China last month.

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Nio Stock, Electric-Car Stocks

Shares closed down 7.2% at 41.98 in Friday stock market trading. Nio stock remains far extended from a 15.55 buy point, meaning shares are not in buy range. Among other electric-car stocks, Li Auto eased 3.5% to 31.36 and is also well extended past a 21.96 cup-with-handle entry, according to MarketSmith chart analysis. Xpeng lost 1.1%. Tesla stock, on the IBD Leaderboard, fell 2.7%.

Nio and other China electric-car startups also are accelerating production capacity expansion, as EV sales rebound sharply from a pandemic hit.

Nio, Li Auto and Xpeng each saw huge jumps in November sales as overall China EV sales more than doubled. Nio’s deliveries also more than doubled last month to 5,291 vehicles.

China electric-car stocks rallied massively last month after the companies added to strong earnings with bullish outlooks. They have pulled back so far in December as the U.S. considers a measure requiring Chinese companies listed here to undergo audits or face delisting. A critical short-seller report about Chinese peer Kandi (KNDI) also is weighing on the companies.

Find Aparna Narayanan on Twitter at @IBD_Aparna.


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